Going for the Gold (Currency, That Is)

Very interesting – from Talking Points Memo:

Legislators in at least ten states have introduced bills in the past few years to allow state commerce to be conducted with gold and silver.

As we reported, Georgia state Rep. Bobby Franklin (R) recently reintroduced legislation to force his state to conduct all monetary transactions with U.S. gold or silver coins — including the payment of taxes…

None of these efforts are going to go anywhere – for now, that is.  While the realization is starting to dawn on people that fiat money and government debt don’t make for real prosperity, we’re still a very long way before people will agree to an alternative.

This is because, first, most people don’t understand gold and silver currency.  The last time we minted silver coin in the United States was in 1964, and while we completely de-coupled our currency from gold only in the 1970′s, it had been some time since us paper currency was immediately convertible to gold.  You have to go to a coin dealer to find that old currency – and I’ll bet that most people under the age of 50 won’t understand, “This certifies that there is on deposit in the Treasury of the United State of America Five Dollars in Silver Payable to the Bearer on Demand” written on that old currency.  But, once upon a time, we had gold and silver on deposit in the US Treasury and we could redeem our paper currency for it on demand…and we didn’t have inflation and massive debt, back then.

The second reason for public wariness is that change is always a bit disturbing.  It caused a bit of a stir to get us off gold, and that is why the process was spread out over nearly 60 years.  Had someone tried to do it all at once, it would have been rejected…but we slowly did it after we created the Federal Reserve in 1913, and by the time Nixon took us off the last shred of gold, it wasn’t must of a big deal as people were completely used to non-convertible currency.  Going back to it would take a gigantic reform of our financial system and trying to do it all at once would probably provoke a negative back lash.

And, so, these small, State proposals to allow gold and silver to be an alternative currency, not yet replacing the fiat money, is a good idea.  If once we can get such a thing passed then people will start to note that their gold and silver maintains or even increases its value against fiat money, while fiat money continually loses value.  People might start insisting on being paid in gold and silver and do more of their transactions in it.  Eventually, we might generate sufficient demand for it to institute the necessary reforms.

And this reform must happen.  America has a lot of problems, but the genesis of each problem is traceable to a relatively small thing.  Our financial problems stem from this lack of gold and silver backed currency.  It could not be demonstrated before it happened, but now the evidence comes flooding in.  Fix our currency and that will be a huge step towards not only reviving the wealth-creating American economy but also of reviving an economy geared towards family, hard worth, sobriety and thrift, with all the social benefits we would accrue from that thrown in to the bargain.

Read more at Noonan for Nevada